Monthly Market Update (May): 3 Things You Need to Know

From the end of the Global Financial Crisis in 2009 until now, the combined balance sheets of the Fed, European Central Bank and the Bank of Japan grew from approximately $5.3 trillion to over $23.7 trillion.(1) The markets were awash in liquidity over the past decade, and the rising tide lifted virtually all financial assets. Central banks around the world are on track to hike rates more than 250 times this year while shrinking their balance sheets.(2) The FOMC post-meeting statement announced that balance sheet runoff will start on June 1. As Warren Buffett famously said, “Only when the tide goes out do you discover who’s been swimming naked.”

Here are 3 things you need to know (3):

  1. The S&P 500 ended May with a gain of 0.01%, despite wild swings, a brief bear market (a drop of 20%), disappointing economic data, and pessimistic forecasts.
  2. The April core PCE price index (the Federal Reserve’s preferred inflation measure) declined to 4.91% year-over-year. Core inflation was again boosted by rapid shelter inflation—which has run at the highest level since 1990 over the last year.
  3. The FOMC raised the funds rate target range by 0.5pp to 0.75%-1.0%, as widely expected. The May FOMC minutes indicated a broad consensus for Fed Chairman Powell’s baseline of 50bp hikes at both the June and July meetings.


  1. Source: Blackstone Investment Strategy, national sources and Macrobond, as of 4/30/2022.
  2. Source: BofA Global Investment Strategy, as of 5/5/2022.
  1. Sources: J.P. Morgan Asset Management – Economic Update; Bureau of Economic Analysis (; Bureau of Labor Statistics (; Federal Open Market Committee (
  2. Indices:
    • The Barclays Aggregate Bond Index is a broad-based index used as a proxy for the U.S. bond market. Total return quoted.
    • The S&P 500 is designed to be a leading indicator of U.S. equities and is commonly used as a proxy for the U.S. stock market. Price return quoted.
    • The MSCI ACWI ex-US Index captures large and mid-cap representation across 22 of 23 developed market countries (excluding the U.S.) and 27 emerging market countries.  The index covers approximately 85% of the global equity opportunity set outside the U.S. Price return quoted.
    • The MSCI Emerging Markets Index captures large and mid-cap segments in 26 emerging markets. Price return quoted (USD).

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